UK FCA Cracks Down on Crypto Firms, Hundreds of Exchanges Receive Warnings

The UK's Financial Conduct Authority (FCA) has intensified its regulatory scrutiny of the crypto sector, issuing hundreds of warnings to unregistered exchanges in October. The advisories were issued in the midst of a renewed effort to make sure that the country's financial regulations are being followed. The FCA has also targeted exchanges such as Elite Bit Markets, Nexure Gainbit, Plux Crypto, and HTX, and it will pursue legal action against firms that continue to serve UK residents without proper registration.

FCA Lawsuit Against HTX Highlights UK's Zero-Tolerance on Unregistered Crypto

Crypto companies must register with the FCA under anti-money laundering regulations and comply with the 2023 financial promotions framework to legally advertise or provide services in the UK. While the government has relaxed some rules, like lifting the ban on crypto exchange-traded notes (ETNs) and publishing a roadmap for tokenised investment funds, the renewed warnings show that the regulator is still focused on protecting investors and making sure things are clear. 

“This action is part of our commitment to protect consumers and uphold the integrity of UK financial markets,” an FCA spokesperson told CoinDesk. “We have seen crypto firms react positively to our financial promotions rules and regulations; however, where we still see poor practices, we will not hesitate to take action where firms appear to be breaching our rules.” The spokesperson further added that executives at companies that break UK advertising laws could go to jail for up to two years and face other penalties. 

The FCA classifies financial instruments into three risk categories, with most cryptocurrencies falling under Restricted Mass Market Investments (RMMI), which carry a medium risk profile. Companies that advertise these kinds of assets must give clear warnings, divert users to informational pages, follow know-your–customer (KYC) rules, and stay away from incentives or rewards that might trick inexperienced people. 

Despite the strict framework, a report by Financial Times suggests that about half of all crypto advertisements flagged between October 2023 and October 2024 remain online. 

The FCA has also sued HTX, which was bought by Tron founder Justin Sun in 2022, for offering digital asset services to people in the UK without approval. In 2023, the regulator had previously issued warnings about HTX, and consumers were advised against using the platform. 

The case also serves as an example to other exchanges operating in the UK to strictly follow the financial compliance requirements and highlights the FCA's zero-tolerance policy towards unlicensed promotion.